Buyback Costs

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Once OPTrust receives the complete application and confirms the member’s eligibility, we will calculate the cost and send an Agreement to Purchase Credit (OPTrust 1017) form to the member’s home address. This agreement sets out the cost of the buyback and the member’s payment options. It also shows the member how much his/her estimated pension will increase and the earliest unreduced retirement date if this buyback is completed.

For certain types of service, the employer is also required to pay contributions to the OPSEU Pension Plan. Note that employer matching contributions could become payable for as long as 10 years 3 months after a cost quote is issued.  

The cost of the buyback – for both the member and the employer - depends on a number of factors, including:

  • the type of service to be purchased (see below)
  • the amount of credit to be purchased
  • the dates of the period of service to be purchased
  • the member’s salary rate as at the time OPTrust receives the complete application.
Non-Contributory Service

Both the member and the employer must pay contributions to the OPSEU Pension Plan for purchases of prior non-contributory service.

The member’s cost for buying back a period of prior non-contributory service is based on the following formula

Member’s annual salary rate
(as at complete application)
 x Member contribution rate
(during the period being purchased)
 x Years of credit to be purchased

The employer’s cost for a prior non-contributory buyback is based on a similar formula:

Member’s annual salary rate
(as at complete application)
 x Employer contribution rate
(during the period being purchased)
 x Years of credit to be purchased

For a table showing the member and employer contribution rates in effect at different times in the past, see the section on Reporting Pension Data.

Prior Contributory Service

For all prior contributory buyback service applications made before October 1st, 2010 the member and the employer also pay contributions to the OPSEU Pension Plan. The employer’s cost for this type of buyback is calculated using the same formula as the employer cost for prior non-contributory service (see above). The employer's cost is identical to the member's cost.

Note: The employer's contributions are required for all purchases of prior contributory service for members who submitted applications before October 1, 2010. Buyback payments for this service may be made at any time within 10 years and three months from the mailing date of the original cost quote. This means that prior contributory buyback applications received up to September 30th, 2010 could require matching employer contributions up to the year 2020.

If the member applied to purchase prior contributory service on or after October 1, 2010, the member's cost for the service is based on an "actuarial" basis, meaning it represents the value of the additional pension he or she will receive from OPTrust as a result of the purchase. If the purchase allows the member to retire sooner, this will be reflected in the cost. The employer does not make any matching contributions for this type of buyback.

Unpaid Leaves of Absence

For leaves due to illness and WSIB, pregnancy, parental and adoption leaves (when purchased after the leave has ended), the buyback cost for both the member and the employer is calculated using the same formulas as non-contributory service (see above). If contributions are to be maintained during the LOA, the amount payable is equal to the regular contributions the member and employer would have made if the employee was not on leave.  

For special and educational leaves, however, the employer does not make matching contributions. For these types of leave, the member pays both the member and employer share of contributions, based on the above formulas.

Service with Another Registered Pension Plan

The member’s cost for service with another pension plan is calculated differently. It is based on the projected – or “actuarial” – value of the additional pension he or she will receive from OPTrust as a result of the purchase. If the purchase allows the member to retire sooner, this will be reflected in the cost as well. The employer does not make any matching contributions for this type of buyback.

Open Option Buybacks

Effective February 1, 2010, members can apply to buy back credit for eligible past service, even after the 24-month application deadline. Under the new option, members can also apply for a previous buyback that they did not complete within the ten-year, three month payment window. The cost for an open option buyback is calculated on an "actuarial" basis. To calculate the actuarial cost, OPTrust uses a number of factors – such as age, current salary rate, current interest rates, and the amount of service being purchased – to determine the current cost of the additional pension the member will receive if the purchase is completed. The employer does not make any matching contributions for this type of buyback.

Costing Transfers under a Reciprocal Transfer Agreement

Under a reciprocal transfer agreement between OPTrust and another plans, the transfer amount is based on actuarial assumptions set out in the agreement. In general, it is less costly to the member to transfer credit than to purchase the service as a buyback. The employer does not pay any contributions for service purchased under a reciprocal agreement.